UAE: Rising rents mean new tenants will likely pay more for smaller homes

Many landlords are also moving towards the 'holiday home concept'


Waheed Abbas

Published: Sun 11 Sep 2022, 1:26 PM

Last updated: Sun 11 Sep 2022, 9:46 PM

UAE residents who will be renting for the first time are likely to pay more for smaller spaces, owing to a rise in rentals and a shortage of villas, according to real estate industry executives.

The demand for bigger apartments and villas has been on the rise since the pandemic triggered movement restrictions. Today, even though Covid cases are dropping and precautionary measures have been eased, the demand continues to grow. This meant new tenants entering the market will have to bear with the new reality of paying more for less.

"With rental prices on the increase daily, new tenants that enter the market must understand they are likely to get less with their money than those who are already in the market and have a bigger unit. Although rent rising is inevitable, those with bigger units are likely to hold onto these... therefore, there are more readily available smaller units," said Morgan Owen, managing director, Provident Real Estate.

Ali Rao, group CEO of Kingsley Properties, said new buyers are shifting to apartments because of annual contracts that make it more feasible for them to move every year.

He said many residents continue to live in smaller apartments because they now realise that the changes they adopted during Covid-19 are "perhaps more sustainable and cost-effective".

Ayman Youssef, vice-president at Coldwell Banker, UAE, said the shortage of villas and townhouses continues to push prices up in the segment.

"Though this trend is not as aggressive in apartments, we are witnessing a steady increase in demand for luxury-serviced residences and sea-facing apartments. The affordable property segment, on the other hand, has witnessed a moderate price increase," he said.

Landlords moving to holiday homes

Sharing details about new trends in the resident market, Owen further revealed that landlords are also moving towards the 'holiday home concept' as this gives them better yields and flexibility.

"Additionally, landlords are starting to see the value of property management and having a team or individual to manage the property from start to finish, making it both easier for landlord and tenant," he said.

Rao said there's also palpable excitement amongst investors who now see holiday homes as a great model to earn more from rentals.


Shilpa Mahtani, COO and co-founder of bnbme Holiday Homes by Hoteliers, earlier told Khaleej Times that a holiday home owner can earn anywhere between 10 and 50 per cent more than the traditional long-term rental.

"The biggest advantage is that once they start renting out their houses, homeowners can earn 25 per cent more year on year, aided by positive reviews and our marketing," she said.

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